Mortgage Debt Relief Extended through 12/31/2013

The Mortgage Forgiveness Debt Relief Act and Debt Cancellation

The Mortgage Forgiveness Debt Relief Act of 2007 was set to expire on 12/31/2012.  In short, what this act protected distressed homeowners from was extra taxes on already financially strapped people.  You see, when a bank accepts to allow a homeowner to short sale their home, and the bank writes off the loss, they send the homeowner a 1099 Form.  Normally, this 1099 translates into taxable income.  Most people that are struggling to live paycheck to paycheck &  have their federal taxes withheld with each check, do not have plans or a budget to pay additional taxes to the government, especially when there was no "cash" paid out.  

For people who were in the midst of getting their short sales approved, they may have been on the fence about just letting their homes go to foreclosure rather than face the burden of extra taxes if this act wouldn't be extended.  I agreed with my clients who felt this way. Even though sales is my business, I'd never want my clients to go through with a sale that would leave them with a bill in the 10's of Thousands of dollars from the IRS.  

Fortunately, the National Association of Realtors has indicated that this Act has been extended through 2013.  I feel this is going to help all those who were considering selling their home via a Short Sale to get off the fence and act quickly.  Short Sales can sometimes take 9 months to negotiate with a homeowners lender.  I know they'd rather be in a position to move forward with their lives, rather than be held back and left sinking under a mound of debt.  (http://www.realtor.org/articles/real-estate-provisions-in-fiscal-cliff-bill)

If you'd like more information on the Mortgage Forgiveness Debt Relief Act and Debt Cancellation from the IRS, the link is: http://www.irs.gov/Individuals/The-Mortgage-Forgiveness-Debt-Relief-Act-and-Debt-Cancellation.

If you are a homeowner and in financial distress, The Lazrak Realty Team is a group of Certified Distressed Property Experts. What that means is we are certified trained in helping homeowners through the process of a short sale or figuring out a way to help you stay in your home through a loan modification.  For more information on how we may help you, log onto our website at www.ChristinaLazrak.com.